noun Electronics.
chip1 ( def 5 ).

1965–70; micro- + chip1

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World English Dictionary
microchip (ˈmaɪkrəʊˌtʃɪp)
1.  a small piece of semiconductor material carrying many integrated circuits
vb , -chips, -chipping, -chipped
2.  (tr) to implant (an animal) with a microchip tag linked to a national computer network for purposes of identification

Collins English Dictionary - Complete & Unabridged 10th Edition
2009 © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins
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Word Origin & History

"integrated circuit," 1975, from micro- + chip.
Online Etymology Dictionary, © 2010 Douglas Harper
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American Heritage
Science Dictionary
microchip   (mī'krə-chĭp')  Pronunciation Key 
See integrated circuit.
The American Heritage® Science Dictionary
Copyright © 2002. Published by Houghton Mifflin. All rights reserved.
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American Heritage
Cultural Dictionary

microchip definition

The basic component of modern miniaturized electronics. The “chip” is a series of electrical circuits built into a tiny wafer of silicon or another semiconductor.

Note: These circuits may be made by exposing the chip to a high-temperature vapor of controlled composition. The vapor deposits a thin layer (sometimes only a few atoms thick) on the silicon. In this way complex layers of materials, such as those found in transistors can be built up in a very small area.
The American Heritage® New Dictionary of Cultural Literacy, Third Edition
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Example sentences
So the question isn't whether you should have a microchip implanted.
Pressing a button on its base plays back spoken prescription information,
  stored in a microchip, through a miniature speaker.
Microchip makers and personal-computer manufacturers are already slogging it
  out with rivals, and casualties are mounting.
It would make money selling a small microchip embedded in bricks and devices
  that would conduct the power flow.
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